Start of main content

Warning: the 2019 Corporate Tax, the sums don’t add up

| News | Tax

Miguel Blasco points out the need to adapt the tax declaration period to the new deadlines for the formulation and approval of the Annual Accounts established by the state of alert

It is urgent to adapt the declaration period to the new commercial deadlines for the preparation and approval of the Annual Accounts, and we refer to the Annual Accounts for the 2019 financial year, because after the declaration of the state of alert and its successive extensions, and under the measures introduced by the 17th March Royal Decree Law 8/2020, the maximum period for the formulation of the annual accounts by the administrative body of a company is for the time being extended to 10th August, and the period for approval of the accounts by the Ordinary General Meeting is extended to 10th November, except in the case of listed companies, which have a deadline of 31st October. Dates, all of them, after 27th July 2020, the deadline for the presentation and payment, if applicable, of the corporate income tax return for 2019 for most Spanish companies. And the accounting profit is, by legal imperative, the starting figure for the calculation of the tax.

Can payment of the tax be required when the annual accounts have not been formulated by the directors or if, even if they had, they had not been approved by the General Meeting of Shareholders, because it was necessary to make use of the extensions granted for this purpose? We understand not, for many reasons.

What would be the consequence if, after filing the declaration, the management body formulated the accounts with a different result from the one declared? If an additional payment had to be made, outside the deadline for declaration, surcharges of between five and twenty percent plus interest on arrears could be imposed, depending on the delay. On the other hand, if an excessive payment has been made, a procedure for the refund of the undue payment will have to be carried out. What if the declaration is not submitted on time, while waiting for the formulation or approval of the accounts? In addition to the above consequences, it would be impossible to exercise truly relevant tax options, which are conditioned by the timely filing of the return. In addition, the legal representatives of an entity should not be required to file a tax return that does not correspond to a legally prepared or approved account, because of the liabilities they may incur.

It should also be added that in the current exceptional circumstances, there is great uncertainty about the viability of many companies, which may lead their directors to determine that the company will be wound up, cease trading, or that there is no more realistic alternative than to do so. In these cases, even if the 2019 accounts were already prepared, they should be restated in accordance with the accounting principles for companies in liquidation. The reformulation, which is possible at any time prior to the General Meeting (until 10th November), would also lead to differences between these accounts and those used to file the tax return, with the potential consequences already noted. The same would occur if the General Meeting did not approve the accounts for similar reasons.

There are possible solutions to avoid the above consequences. The first would be to extend the period for declaring the tax to twenty-five calendar days following approval of the accounts by the General Meeting. This, in addition to adapting to the new commercial deadlines, would avoid the adverse consequences indicated, at least for accounts formulated or reformulated before the General Meeting. The second would consist of eliminating the surcharges and penalties derived from the presentations made after the deadline, recognizing the situation of force majeure in which we find ourselves. A third could be the consideration of the declaration to be presented until 27th July as a payment on account of another definitive one, which would be presented during the twenty-five days following the approval of the accounts by the General Meeting. With this definitive declaration, an additional payment would be made, without any surcharge, or a refund would be requested, with respect to the part payment made, which would be processed through the standard procedure.

You can see the article in Expansión.

End of main content